Air India braces for record $1.6-billion loss after Ahmedabad plane crash

Air India is the airline of India and people know it very well all around the world. It flies to places in India and to big cities, in Europe, North America, the Middle East and Asia. For a time the government of India owned Air India but then something big changed in 2022 to 2024. The Tata Group bought most of Air India. Then they combined Air India with Vistara, which is a company that the Tata Group and Singapore Airlines started together. Air India is still the airline of India and it keeps flying to many places. The new ownership aimed to transform the airline from perennial losses toward profitability and global competitiveness.

Before the crash the people in charge of Air India were working on a plan to stop the company from losing money and make it financially healthy again. People who know about Air India say that the company was getting closer, to not losing much money and they thought it would almost break even by the end of the financial year on 31 March 2026.. Now a lot of bad things have happened and that progress has been undone. Air India was really trying to get on track but these bad events have set Air India back.

2. The Ahmedabad Crash. Let me tell you what happened with the Ahmedabad Crash. The Ahmedabad Crash was a big deal and I want to know more, about the Ahmedabad Crash. So the Ahmedabad Crash what actually happened during the Ahmedabad Crash?

On 12 June 2025 Air India Flight 171 which was a Boeing 787-8 Dreamliner was going from Ahmedabad from Sardar Vallabhbhai Patel International Airport, to London Gatwick Airport. This Air India Flight 171 then crashed. It happened seconds after Air India Flight 171 took off. The crash was into a college building. It was, in Ahmedabad.

Details of the Crash

The aircraft took to the sky at 13:38 IST. It was in the air, for thirty seconds. Then the aircraft lost control. This happened quickly after the aircraft lifted off. The aircraft was the one that lost control.

There were 242 people on board — 230 passengers and 12 crew members.

One person on the plane was the survivor. The crash also killed 19 people who were on the ground. Dozens of people, on the ground were hurt really badly by the accident. The plane crash was very bad. Many people were affected by it.

The plane hit the building where the students of B.J. Medical College live. It caused a lot of damage to the building. The damage, to the hostel block of B.J. Medical College was really bad.

The people in charge of looking into airplane accidents in India were still trying to figure out what happened. They were working with experts to find out why the accident occurred and what else might have contributed to it. The Indian aviation authorities were doing a thorough investigation at the time we were finding out about this. They were still asking questions, about the accident. What factors contributed to the accident.

3. Immediate Human and Operational Impact

The accident had an effect on people. Along, with the problems it caused with the government and the way people felt Air India had to pay a lot of money to the people who were affected by the accident:

When people get hurt or die on flights that go to countries the airline has to pay for what happened to them. This is because of rules like the ones in the Montreal Convention. The Montreal Convention says that airlines are responsible for taking care of passengers on flights. If something bad happens to a passenger, on a flight the airline has to pay damages because of the Montreal Convention.

The Tata Group and Air India said they will give money to the families of the people who were killed or hurt. They also want to help fix the buildings that were damaged in Ahmedabad. The Tata Group and Air India are trying to do something for the people who were affected. The Tata Group and Air India think this is the thing to do.

On the operational side:

Air India stopped flying some of its Boeing 787 planes because the government said they had to do safety checks after the crash. Air India had to do this to make sure the Boeing 787 planes are safe to fly. The government told Air India to ground the Boeing 787 fleet so they can check everything is okay, after what happened with the crash and the Boeing 787 planes.

The international schedules had to be changed for a while. This was because people wanted to make sure everything was safe. So they did some safety checks. They also changed the flight numbers, for the routes that were affected. The international schedules were modified to keep people safe.

These things that happened away messed up the flight schedules and made customers lose trust in the airline. Which made the financial problems even worse, for the airline. The financial problems of the airline got really bad because of these consequences.

4. Now The Financial Problems Start To Add Up. The Financial Toll Begins To Affect Everything Related To The Financial Situation And The Financial Toll Itself.

Although airline finances are multifaceted, aircraft accidents are among the costliest events for carriers, with multiple layers of expenses:

a. Loss of Revenue

Cancelled flights and grounded planes reduced ticket sales on profitable long-haul routes.

The company had a reputation and that caused people to book less, especially people from other countries who like to travel in style. These international premium travellers did not want to book with the company because of the reputation damage. The reputation damage really hurt the company. Led to decreased bookings, from international premium travellers.

b. Compensation and Legal Costs

Air India had to pay compensation to the families of the people who died in the accident and to the people who were hurt and survived. Air India also had to set aside money for this compensation. This is because Air India has to take care of the families of the passengers and the injured survivors of Air India.

If something goes wrong the people in charge may be in trouble. This trouble can get even worse if investigators find out that someone else was also, at fault, not the pilot or the people who do maintenance on the aircraft. The legal liabilities can extend further if they identify that someone or something else contributed to the problem beyond the pilot or maintenance issues.

c. Increased Insurance Premiums

When a big accident happens in aviation the people who insure the airlines have to take another look at how much risk’s involved. This usually means that the airline will have to pay more for its insurance in the future. The aviation insurers do this to make sure they are covered in case something bad happens again. The airline is the one that has to pay these premiums, which can be a big deal for them. Aviation insurers and the airlines they insure, like the carrier have to deal with these changes.

d. Fleet and Maintenance Costs

The Boeing 787 aircraft had some safety issues. This meant that the Boeing 787 aircraft needed maintenance work. As a result the Boeing 787 aircraft had costs, for this maintenance work. Also there were Boeing 787 aircraft available to fly and make money for the company.

These things can really hurt an airline like Air India. Cause big financial problems. For Air India the crash was a blow that made things even worse when they were already struggling to get back on track. The airline was trying to turn things around. It was not going very well and the crash made it even harder, for Air India.

5. The bigger problems in the sector make things worse for the broader sector challenges. This means the broader sector challenges have a big effect. The broader sector challenges are made worse by issues, in the sector so the broader sector challenges become even more of a problem.

The crash did not happen by itself. Air Indias financial plans were also affected by things happening around the world that changed the way Indian airlines, like Air India could fly distances.

Something big happened between India and Pakistan. They had a fight with their armies. So Pakistan did not let Indian airplanes fly through their air. This meant that airlines like Air India had to take a way to get to Europe and the United States. They had to fly around Pakistan which was not a way to go. It took time and it was not very efficient. India airlines, like Air India did not like this all.

Longer routes are a problem because they have some issues.

These issues are:

* More things can go wrong on routes.

Longer routes will always cost more. Take more time.

Longer routes are just not as good as ones.

The main thing, with routes is that they are longer.

This means longer routes have chances to incur extra costs and problems.

Higher fuel costs

Expanded crew hours

Increased aircraft utilization costs

These things really add up when you are talking about thousands of flights. They cut into the profit that the airline makes on some of their routes. The airline makes a lot of money on these routes. These things cut into the airlines profit margins.

The Indian aviation sector is having a time right now. People who fly are getting really worried. There are a lot of flights being cancelled and delayed. This is happening because the Indian aviation sector is very busy and there are not planes to meet the demand. Also the Indian aviation sector has a few airlines that control most of the market which is causing problems. The Indian aviation sector is feeling the strain of all these issues.

The Scale of the Loss Estimate

Air India is going to have a big loss this year. They think it will be around ₹15,000 crore which’s about $1.6 billion. This will be for the year that ends on 31 March 2026. This loss will be the biggest Air India has ever had. It is a change, from what was happening when the Tata Group was trying to make Air India profitable again. Air India was starting to do but now it is going to have this big loss.

The Air India Flight 171 crash estimate comes from Bloomberg and people who work in business and know about the financial information of Air India. This estimate is about the money that Air India lost because of the Air India Flight 171 crash, in Ahmedabad, where 260 people died and because of the problems this caused in the aviation sector. The estimate includes the costs that are directly related to the Air India Flight 171 crash and the costs that are indirectly related to the Air India Flight 171 crash.

Air India has not shared the financial reports for this year so far.. People who know about the industry say that the data about Air Indias performance, which has been collected by financial experts and websites like Tofler already shows that the airline has lost more than ₹32,000 crore in the last three years. This shows that Air India was already facing problems even before the crash happened. Air Indias problems are very deep. Were there even, before the crash.

2. Components of the Loss

a. Compensation to Victims and Families

When we talk about aviation liability there are rules like the Montreal Convention of 1999. These rules say that airlines are responsible for injuries and deaths of passengers up to a limit. This is true no matter who is at fault.

Air India did something for the families of people who were killed or injured. They offered them some money on their own in addition, to the money they had to give by law.

According to reports:

The Tata Group said they will make payments to the families of people who died. This payment is around ₹10 million, for each person who died. The Tata Group will also pay the expenses for people who were injured. The Tata Group is doing this to help the people who were affected.

The people who were on the ground and got killed or hurt when the plane crashed also got compensation. The compensation was the same for these people, on the ground who were killed or injured in the crash.

The airline has a lot of responsibilities especially when it is flying to another country with foreign passengers on the international flight. These responsibilities can cost the airline hundreds of millions of dollars. This is a deal and it really adds to the expenses for the year. The expenses for the year are a concern, for the airline because of these international flight responsibilities.

b. Aircraft Loss and Fleet Impact

The Boeing 787-8 Dreamliner that was operating Flight 171 got completely destroyed in the crash. This Boeing 787-8 Dreamliner is a loss. The Boeing 787-8 Dreamliner cannot be. Used again.

Airlines usually have insurance that pays for some of the Boeing 787-8 Dreamliners value.. The insurance does not pay for everything. There are costs that the airlines have to pay themselves like when they have to pay an amount of money before the insurance starts to pay and there are limits, to how much the insurance will pay for the Boeing 787-8 Dreamliner.

In addition to the destroyed aircraft’s value:

Air India stopped using a lot of its 787 planes for a while so they could check them out. This meant they had seats on some flights that go to other countries. They also had to cancel some flights, on routes that people use a lot. Air India had to do this with its 787 fleet.

The airline had planes that they could use to make money. This meant they lost a lot of seat miles and revenue. The airline really felt this loss on their flights that normally make a lot of money like the long-haul flights.

c. Rising Costs from Airspace Closures and Route Changes

So there are problems between countries in that area. For example India and Pakistan had a fight with their armies. Because of this Pakistan did not let Indian planes fly through their airspace. This meant that Air India and other Indian airlines had to take long routes to get to Europe and the United States. These routes use a lot fuel and are not very good, for the planes:

Fuel consumption

Crew duty hours

Maintenance and flight-time costs

Turnaround inefficiencies

The airline is dealing with costs. These costs are not because of the crash.. They are making things harder, for the airline. They are making it cost more to run the airline. That means the airline is not making as much money as it could be. The airline has to pay more. That is cutting into the money it makes.

d. Brand and Demand Impact

The crash did more than just cost a lot of money away and affect how things run every day. It also hurt the reputation of the company. This was a problem especially when it came to selling tickets to people in other countries who are used to high quality service. When there is an accident people start to lose trust, in the company. This leads to:

Lower bookings, especially among business and premium travellers

Increased refund and loyalty compensation claims

Greater marketing and public relations spending to rebuild trust

It is really hard to put a number on these kinds of costs but people who study this stuff like analysts they think about them when they make predictions about how money a company will lose and how long it will take for things to get back to normal. These costs like the ones we are talking about are important to consider when analysts make forecasts, about revenue shortfalls and slower demand recovery.

3. Role of Insurance and Third-Party Coverage

Airlines usually have a lot of insurance for flying their planes. This includes types of insurance for commercial aircraft operations, such, as:

Hull insurance for physical aircraft damage

Liability insurance for passenger and third-party losses

Loss of license and income insurance to cushion revenue drops

However, even with insurance:

Policies have limits on how much they will cover. This means they may not be able to pay for the amount of money that is lost after a big accident. Policies, like these can be a problem because they do not always pay for everything that is lost. The total economic loss after accidents can be very high and policies may not be able to cover all of it.

When you are in a car crash people think it is more likely that you will be in another crash. Because of this the cost of your car insurance, which is what you pay to be insured usually goes up. This means you have to pay money for your car insurance every time you pay for it and this can happen over and over again. This is a cost that you have to pay again and it can be a problem, for you. Car insurance is something that you have to pay for and car crashes can make the cost of car insurance go up.

Insurers can argue with people about parts of their claims. They do this because of what they find out when they investigate. They look at things like who was at fault or how well something was maintained. They use this information to decide what parts of the claim they do not want to pay for. Insurers look at the maintenance history of the thing that was damaged. They also look at the fault, which means who was responsible, for the damage. This helps them figure out what to do with the claim.

For example when there are accidents, with planes the insurance money usually covers a big part of the planes value.. It does not cover all the financial problems that the airline has to deal with. This is probably what will happen with Air Indias loss estimates. Air India will likely have to deal with issues that the insurance money does not cover.

4. Internal Financial Projections and Board Reaction

Before the crash the people in charge of Air India were saying that Air India would be making money to cover its costs by the end of the fiscal year in March 2026. This was a deal for Air India because it was a major goal in the companys plan to get back on its feet. The plan was put in place by the Tata Group and Singapore Airlines when they partnered with Air India. The goal was for Air India to turn things around. This was a big step in that plan, for Air India.

After the accident and ensuing disruptions:

The company has given up on that breakeven target. Now it seems that the company will not make a profit this year. The idea of profitability, for the company is not looking good for this year. The companys profitability is unlikely to happen this year.

The people in charge came up with a five-year plan that said the company would make money but only after three years. The airlines board did not like this plan. They said no. They wanted a plan that would help the airline get better a lot faster. They wanted to see the airline make money sooner so they told the people in charge to come up with a plan that was more aggressive. The airlines board wanted the five-year plan to be stronger. The five-year plan was supposed to help the airline. The board was not happy, with it.

There are disagreements about what to do and what to plan for the future. These disagreements show that people are having trouble figuring out how to fix things away and also make good plans for the long term. The recovery needs for the term are different, from the strategic planning that is needed for the long term.

5. Strategic Consequences for Leadership and Ownership

The mounting loss has really gotten companies to react in ways:

a. CEO Search and Leadership Changes

The Tata Group is looking for a Chief Executive Officer for their airline. They want to replace the person who’s in charge now.. They might wait until they get the official report about the crash. This report will help them understand what really went wrong. The Tata Group will use this information to make a decision, about the Chief Executive Officer of their airline.

b. Singapore Airlines’ Stake

Singapore Airlines, which owns twenty five point one percent of Air India after joining with Vistara has also been affected. The poor performance of Air India has hurt the earnings of Singapore Airlines even though Singapore Airlines is helping Air India to make some changes, such, as taking care of the maintenance of Air India aircraft by itself.

c. Board and Investor Pressure

The investors and the board are pushing for the company to make changes quickly. They want the company to do things like change the fleet cut costs and make sense of the routes. This is so the company can stop losing money and be more competitive. The investors and the board think these changes will help the company to be better, in the future. They want the company to make these changes to the fleet cost reduction and route rationalizations to stop losing money and boost the competitiveness of the company.

6. Comparison with Typical Airline Loss Events

When a big airline has an accident the airline company usually has to deal with a lot of financial problems. These problems happen one, after the other. The airline company has to face these effects when something really bad happens to one of their planes.

Immediate compensation and legal costs

Insurance claim processes and potential disputes

Short-term operational disruptions

Reputation and demand shocks

Increased financing costs and capital constraints

A lot of airlines around the world have managed to stay in business after losses. They do this by changing the way they work having flights and making sure people know what is going on with safety. Airlines usually take a hit to their profits for a little while though. This is something that airlines, like airlines have to do to keep going.

Air India’s projected $1.6 billion loss — while historic for the airline — fits this pattern of accident-related financial shock combined with broader sector stress.